For many investors, retirement accounts are passive by design. A 401(k) generally offers a relatively short menu of target date stock and bond funds selected by an employer or provider. A traditional IRA usually provides more flexibility, but investment decisions may still be limited by product availability. In both cases, some investors may choose to set it, rebalance occasionally, and let the system run.
Self-directed IRAs (SD-IRAs) allow investors to rethink that model. The account holder has direct control over how their capital is allocated, generally with far fewer constraints on asset selection. That flexibility has made SD-IRAs increasingly popular among investors who want a more active hand in their retirement investing.
Once investors have control, the question becomes how to apply it. Private markets may be an option, as they are a category some investors evaluate when considering broader portfolio diversification. Assets like private equity and private credit have become common allocation options for investors looking to diversify their overall portfolios heavily weighted toward public markets.
Below are a few defining features of private markets worth considering when reviewing SD-IRA options.
Public Markets: Shrinking in Size, Growing in Concentration
First, there’s a secular trend every investor should be aware of: public markets are smaller and more concerned than they’ve been in decades.
Since 1996, the number of public companies has fallen by roughly half, while the number of private-equity-backed companies has increased fivefold. Since 2022, companies have been delisting from public exchanges at a pace 3.5 times higher than new public listings. And in 2024, just six companies accounted for 33% of the S&P 500’s total annual return.
Public markets have long been an engine of economic growth—and they’ve continued to perform relatively well. But most of the economy is privately held. Eighty-seven percent of companies with more than $100 million in revenue, to be exact.
These figures may help explain why institutional investors have made private market assets a staple of their portfolios. In recent years, institutional allocations to private assets have climbed to record levels.
Rethinking Diversification in Modern Markets
This matters for individual investors because diversification looks different in 2026. Public equities no longer offer the breadth they once did, and bonds haven’t been as reliable a hedge. Since 2022, stock-bond correlations have turned positive, weakening one of the core assumptions behind the traditional portfolio mix.
Private markets come with their own risks, but in recent decades, they’ve served as a useful diversification tool alongside public markets. Private assets generally show low correlation to public-market performance and exhibit lower volatility.
From 2000 to 2025, annualized volatility for the S&P 500 and the Russell 2000 was 16.5% and 21.4%, respectively. Over the same period, annualized volatility for the PitchBook Private Equity Index and the Private Debt Index was 9.5% and 7.7%.
You may have heard Larry Fink, BlackRock’s CEO, declare the traditional 60/40 portfolio dead. These dynamics are what he was referring to.
Note, these investments are, by nature, generally less volatile than the stock market, however, this lack of volatility does not necessarily translate to the investments not fluctuating in or losing value. Further, the value of these investments will fluctuate and it's important to note that private market volatility figures reflect infrequent valuations and may not capture actual price movements. Past performance and volatility are not indicative of future results.
Where Private Markets and SD-IRAs May Align
Until recently, private market investments were largely out of reach for many individual investors. Access was limited to a relatively small circle of ultra-wealthy, well-connected individuals able to write seven-figure checks to private equity firms. That’s no longer the case. Today, a growing range of vehicles gives individuals access to private markets—but it’s worth understanding why these assets were historically restricted, and what it takes to manage them responsibly.
One of the defining characteristics of private assets is illiquidity. When investors buy a public stock or bond, they can typically sell it at will. Things work differently with private market investments like private equity funds. Capital commitments are often locked up for several years, with limited, if any, opportunities for withdrawal, as managers pursue an incremental return. While some registered funds offer periodic liquidity, such as quarterly redemption windows, these opportunities are subject to Fund Board discretion.
That illiquidity means private assets aren’t a fit for every investor or every pool of capital. Retirement capital is already designed to be long term and illiquid, so private assets may not be as much of a roadblock for some IRA investors. Investing in private markets through an SD-IRA aligns long-term capital with long-term investments.
In light of this alignment, it’s important to consider the distinct risks that come with private market investments. Investors face the potential for loss of principal, particularly given longer investment horizons and limited liquidity. Outcomes depend heavily on a manager’s ability to execute a business plan, which introduces operational risk. Private investments also tend to involve more opaque valuations and less frequent disclosure, making performance harder to assess in real time. Understanding these risks—along with the fee structures present in private markets—is key to being an informed investor.
Putting Control to Work
SD-IRAs bring control, and with that control come important considerations: How do diversification, liquidity needs, time horizon, fees, and tolerance for loss factor into evaluating whether an SD-IRA fits within a broader portfolio strategy?
There’s no single right answer, and these choices are inherently personal. But staying attuned to how markets have changed—and where diversification may still be found—is part of being an SD-IRA investor. For some, private markets can play a meaningful role.
For more than a decade, Crowd Street has enabled self-directed access to private market investments, with SD-IRAs as one of the ways members allocate to these assets. The firm’s partnership with Equity Trust is one of several ways it has expanded this pathway in recent years.
For investors looking to diversify their retirement portfolio—or SD-IRA custodians seeking a partner—Crowd Street provides a platform through which eligible investors can explore private market opportunities.
